Oil extends losses on prospect of higher OPEC+ supply

By Florence Tan

SINGAPORE (Reuters) – Oil prices extended losses on Monday as investors weighed higher OPEC+ production in October against a sharp drop in output from Libya amid sluggish demand from China and the U.S., the world’s two biggest oil consumers.

Brent crude futures were down 57 cents, or 0.7 percent, at $76.36 a barrel by 0108 GMT, while U.S. West Texas Intermediate crude was down 50 cents, or 0. 7%, at $73.05 per barrel.

The losses followed a 0.3% drop for Brent last week and a 1.7% drop for WTI.

The Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, are set to go ahead with a planned increase in oil output from October, six sources at the producer group told Reuters.

Eight OPEC+ members are scheduled to raise output by 180,000 barrels per day in October as part of a plan to begin unwinding the most recent level of 2.2 million bpd output cuts while maintaining other cuts until the end of 2025.

“There are fears that OPEC will go ahead and increase output from October,” said IG market analyst Tony Sycamore.

“However, I think this outcome is price dependent because it happens if the WTI price is closer to $80 than $70.”

In Libya, the Arabian Gulf Oil Company has resumed production of up to 120,000 bpd to meet domestic needs, while exports are still halted, engineers said on Sunday, after a factional standoff shut down most of the country’s oil fields.

Both Brent and WTI posted losses for two straight months as economic concerns in China and the US outweighed supply disruptions in Libya and rising geopolitical tensions in the Middle East.

China’s manufacturing activity fell to a six-month low in August as factory-gate prices fell and owners scrambled for orders, an official survey showed on Saturday, putting pressure on policymakers. to press ahead with plans to direct more stimulus to households.

“China’s softer-than-expected PMI released over the weekend adds to concerns that the Chinese economy will miss growth targets,” Sycamore said.

In the US, oil consumption slowed in June to the lowest seasonal levels since the coronavirus pandemic in 2020, data from the US Energy Information Administration showed on Friday.

“We see a growing downside in 2025 driven by economic headwinds from China and the US,” ANZ analysts said in a note.

“We believe OPEC will have no choice but to delay the phasing out of voluntary production cuts if it wants higher prices.”

The U.S. oil rig count was unchanged at 483 last week, Baker Hughes said in its weekly report.

(Reporting by Florence Tan; Editing by Sonali Paul)